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(Photo: Facebook @kingstonproperties)

Kingston Properties eyes warehousing as future trend

(Photo: Facebook @kingstonproperties)

Kevin G Richards, chief executive officer of Kingston Properties Limited (KPREIT), has indicated that the company is pivoting in line with changes occurring in the real estate industry.

In a letter to shareholders published on the Jamaica Stock Exchange website on January 5, Richards said the company would be looking more to investment in warehousing and logistics in the future.

Kingston Properties Limited CEO Kevin Richards (File photo)

He observed that “the global pandemic that ground the world’s economy to a standstill, [also] made entire industries almost obsolete and upended the way most companies have traditionally conducted business. 

“Working From Home accelerated the adoption of digital remote platforms, while lockdowns significantly restricted movement and large gatherings. All of this has probably permanently transformed the need for large physical locations and how they will be deployed in the future,” he added.

As the pandemic creates paradigm shifts in the way businesses operate and quicken the pace of advancements in digital and other remote interaction, Richards noted, “We continue to believe that we can ‘future-proof’ our operating model by focussing on warehousing and logistics assets.”

In this regard, KPREIT will be engaging in strategic partnerships to achieve its core objectives of reaching JM$10 billion in equity and managing 1,000,000 square feet of property by 2022. 

(Photo: Facebook @kingstonproperties)

The company, he said, will be returning to the capital markets in 2021 to “take advantage of more attractive assets that meet our risk-adjusted return threshold.”

Maintaining cash resources

Richards said that KPREIT decided at the onset of the pandemic, even in advance of any reported COVID-19 case in Jamaica, to focus on preserving cash.

Year to date, the company has realised a 40 per cent improvement in rental revenue, the CEO reported. In addition, KPREIT has achieved greater efficiency from the deployment of its cash resources, as net operating income (NOI) and earnings before tax increased by 82 per cent and 67 per cent year-on-year, respectively. 

“We continue to believe that we can ‘future-proof’ our operating model by focussing on warehousing and logistics assets”

— Kevin G Richards, chief executive officer, Kingston Properties Limited

“All of the attributes of a REIT are in our DNA, so we focussed on our ability to generate cash from operations, resulting in an 82 per cent year-on-year improvement in Funds From Operations (FFO),” Richards stated.

Furthermore, KPREIT has maintained solid occupancy levels in excess of 90 per cent throughout the year, as well as a similar level of collections during the period, he said.

Last year’s acquisitions

In 2020 the company acquired a fully leased office building in Georgetown, Cayman Islands, and arranged financing for that acquisition in the midst of that jurisdiction’s lockdown. 

Harbour Centre in the Cayman Islands. (Photo contributed by Kingston Properties)

Additionally, it acquired an 88,000-square-foot, value-added industrial property in close proximity to the ports in Kingston, Jamaica. 

Notably, the CEO said, the company has also repriced the bulk of bank borrowings to rates between 2.0 per cent per annum and under 4 per cent per annum.  

It has also reduced its Miami condo portfolio, further allowing it to eliminate debt with its bankers in the US and increase cash holdings for new property acquisitions or distribution to shareholders. 

Richard said KPREIT’s directors remained  confident that “global monetary policies will remain accommodative, which augurs well for the future stability of certain asset classes like real estate.”